Should You Buy Southside Bancshares, Inc. (SBSI)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was McKinley Capital Management).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Southside Bancshares, Inc. (NASDAQ:SBSI) but similarly valued. These stocks are State Bank Financial Corp (NASDAQ:STBZ), Vascular Solutions, Inc. (NASDAQ:VASC), Fox Factory Holding Corp (NASDAQ:FOXF), and SPX Corporation (NYSE:SPXC). This group of stocks’ market caps are closest to SBSI’s market cap.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $34 million in SBSI’s case. SPX Corporation (NYSE:SPXC) is the most popular stock in this table. On the other hand Fox Factory Holding Corp (NASDAQ:FOXF) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Southside Bancshares, Inc. (NASDAQ:SBSI) is even less popular than FOXF. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.